Commonwealth Bank: Wikis

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Commonwealth Bank of Australia
Type Public (ASX:CBA)
Founded 1911 as a government bank
1991 as a public company
Headquarters Australia Sydney, Australia
Area served Australia Australia
New Zealand New Zealand
Fiji Fiji
Indonesia Indonesia
Vietnam Vietnam
United Kingdom UK
United States USA
People's Republic of China China
Hong Kong Hong Kong
Singapore Singapore
Key people Dr John Schubert, Chairman
Sir Ralph Norris, CEO and Managing Director
Industry Finance and Insurance
Products Banking, financial and related services
Revenue $28.564 billion AUD (2006)
Profit $4.723 billion AUD (2009)[1]
Total assets $780.299 billion AUD (2009)[2]
Employees 44,218 full-time equivalent (2009)[3]
Divisions Retail Banking Services, Business and Private Banking, Institutional Banking and Markets, Wealth Management, International Financial Services.[4]
Subsidiaries BankWest, ASB Bank, Colonial First State Investments Limited, Sovereign Limited, Commonwealth Securities and CommInsure
Website www.commbank.com.au

The Commonwealth Bank of Australia (ASXCBA) is the largest bank by market capitalisation in Australia[12][13], with businesses across New Zealand,Fiji, Asia, USA and the United Kingdom. Commonwealth Bank provides a variety of financial services including retail, business and institutional banking, funds management, superannuation, insurance, investment and broking services. Commonly referred to as the Commonwealth Bank (or Commbank), The Commonwealth Bank is now the second largest Australian listed company on the Australian Securities Exchange as of January 2008 with brands including BankWest, Colonial First State Investments Limited, ASB Bank (New Zealand), Commonwealth Securities Limited (CommSec)and Commonwealth Insurance Limited (CommInsure). On 7 December 2007 the bank won its skirmish with ANZ over bragging rights to the title of "Australia's most convenient bank".

Founded in 1911 by the Australian government, the Commonwealth Bank is one of the 'big four' Australian banks, with National Australia Bank (NAB), ANZ and Westpac. The bank listed on the Australian Stock Exchange in 1991 and the government fully privatised it in 1996.

On 14 August 2008 the Commonwealth Bank declared a $4.7 billion annual profit [5]. The bank has approximately 7.7 million customers, 1011 branches and 3350 ATMs (4000 including it's BankWest ATMs), 1000 more ATMs than any other bank. [6].

Contents

History

Old Commonwealth Bank of Australia savings passbook, issued 1977.
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Foundation and early history (1911-1941)

The Commonwealth Bank of Australia was founded by the Commonwealth Bank Act in 1911, introduced by the Andrew Fisher Labor Government, which favored bank nationalisation. In a rare move for the time, the bank was to have both savings and general bank business. The bank was also the first bank in Australia to receive a Federal Government guarantee. The bank's earliest and most strenuous proponent was the flamboyant American-Australian Labor politician, King O'Malley, and its first Governor was Sir Denison Miller.

The bank opened its first branch in Melbourne on July 15, 1912. In an agreement with Australia Post that exists to this day, the bank also traded through post office agencies. In 1912 it merged with the state savings bank in Tasmania, and by 1913 it had branches in all six states.

In 1916 the bank moved its head office to Sydney. It also followed the Australian army into New Guinea, where it opened a branch in Rabaul and agencies elsewhere.

In 1920, the bank took over from the Department of the Treasury the responsibility for the issue of Australian bank notes, the beginning of its acquisition of central bank powers.[7]

In 1920, the Commonwealth Bank merged with the state savings bank in Queensland.

In 1931 the government transferred to the bank the savings bank business of the Government Savings Bank of New South Wales (est. 1871), and the current account and fixed deposit business of the Rural Bank Department. The bank also acquired the State Savings Bank of Western Australia (est. 1863).

Central Bank (1920-1960)

The bank's role in central banking expanded gradually after 1920. In 1931, the bank board came into conflict with the Labor government of James Scullin. The bank's chairman Robert Gibson refused to expand credit in response to the Great Depression (as had been proposed by Treasurer Edward Theodore) unless the government cut pensions, which Scullin refused to do. Conflict surrounding this issue led to the fall of the government, and to demands from Labor for reform of the bank and more direct government control over monetary policy.

In 1942, the Commonwealth Banking Corporation (CBC) suspended its operations in Papua New Guinea as the Japanese Army captured many of the towns in which it operated, and bombed Port Moresby. The bank resumed operations later, possibly in 1944.

The bank had many branches across Papua New Guinea including Port Moresby, Boroko, Rabaul, Lae, Wau, Bulolo, Goroka, Kavieng, Madang, Mt Hagen, Kundiawa, Popondetta and Wewak. On Bougainville there was Kieta, Panguna, Arawa and early on a part time sub branch at Loloho. The bank maintained those facilities to support trade, local business, government and small savers.

The Commonwealth Bank received almost all central bank powers in emergency legislation passed during World War II and at the end of the war it used this power to begin a dramatic expansion of the economy. This was also the aim of the Government at the time. The Government attempted to compel the Australian states to conduct their banking with the Commonwealth under the Banking Act 1945 (Cth), but the High Court in Melbourne Corporation v Commonwealth (1947) 74 CLR 31, blocked this move. The government also colossally expanded immigration programmes. To respond to this, the bank established a Migrant Information Service. The bank expanded during this period. In just five years it opened hundreds of branches throughout Australia and in 1951 it established a branch in the Solomon Islands.

In 1958 and 1959, there was a controversy concerning the dual function of the bank as the central bank on the one hand and a commercial bank on the other. As a result of this, the government split the bank, giving the central bank function to the Reserve Bank of Australia, with the Commonwealth Banking Corporation retaining its commercial banking functions.

From 1958 to 1976 the Commonwealth Bank operated savings bank agencies in the New Hebrides.

Diversification (1960-1983)

A new Commonwealth Development Bank was established in 1960 and during the 1970s the bank diversified its business into areas like insurance and travel. It established a finance company, CBFC in 1974. The bank also became more heavily involved in foreign currency trading and international banking in general.

The bank actively supported the introduction of decimal currency in the years leading up to 1966 and, like most banks, it gradually converted its paper records onto a new computer-based system. The bank created the first credit card in Australia in 1974 when it established Bankcard. In later years the bank began offering Mastercards (1984) and Visa (1993) cards as well.

In 1974, as Papua New Guinea approached independence, the bank formally handed over its PNG operations to the newly created and government-owned Papua New Guinea Banking Corporation (PNGBC). The bank retained a restricted branch in Port Moresby that it finally closed in 1982.

In 1981 the bank transferred its operations in the Solomon Islands to the National Bank of Solomon Islands, which operated as a joint venture (51-49, Commonwealth and Government of the Solomon Islands).

Deregulation(1983-1991)

Old 1980s logo

In 1989 the bank acquired 75% of ASB Bank in New Zealand.

In 1991 the bank acquired the failing Victorian Government-owned State Bank of Victoria (est. 1842).

Privatisation and the Colonial merger (1990-2000)

Between 1991 and 1996 the Australian government fully privatised Commonwealth Bank. It is a public company, but one of the few such companies in Australia whose official name does not end in 'Limited'.

In 1994 Commonwealth sold its shares in National Bank of Solomon Islands to Bank of Hawaii.

In 1994, Commonwealth took a 50% share in PT Bank International Indonesia.

On 10 March 2000, the Commonwealth Bank and Colonial Limited announced their intention to merge, with seven Commonwealth Bank shares being offered for twenty Colonial Shares. The merger received final approval from the Supreme Court of Victoria on 31 May 2000 and was completed on 13 June 2000. This brought into the fold Colonial’s stake in Colonial National Bank, the former National Bank of Fiji. The bank also acquired the remaining 25% of ASB Bank.

Banking opportunities in Asia saw the Bank in 2000 acquire full ownership of PT Bank International Indonesia and rename it (PT Bank Commonwealth). This bank now has over 16 branches and has opened several FX shops to cater to Commonwealth Bank clients who are tourists in Bali.

The bank today (2001+)

Commonwealth Bank was awarded Bank of the Decade in November 1999 and also named Best Bank at the Australian Banking & Finance Awards for the years 1996, 2000 and 2002.

In 2005, the bank established strategic co-operation agreements with two Chinese banks, Jinan City Commercial Bank and Hangzhou City Commercial Bank; it took an 11% stake in Jinan City, and a 19.9% stake in Hangzhuo. Commonwealth also established a representative office in Bangalore, India.

On 27 January 2006 the bank acquired the remaining 49% stake in Colonial National Bank (Fiji)

At the beginning of 2008, Commonwealth Bank opened a branch in Ho Chi Minh City (Saigon).

In October 2008, Commonwealth Bank announced that it had purchased BankWest and St Andrew's Insurances from their parent company HBOS plc for AU$2.1 billion. [8][9] The acquisition is scheduled to be completed in early 2009, subject to regulatory approval.

On 24 December 2008, Commonwealth Bank announced that it had, in joint partnership with Aussie Home Loans, purchased Wizard Home Loans.[10] As part of the deal, the Commonwealth Bank will acquire Wizard mortgages up to the value of AU$4 billion. The Commonwealth Bank currently owns a 33% stake in Aussie.[11] Commonwealth Bank held about 30 percent of the loan business of financial advisory company Storm Financial when it collapsed in January 2009.[12]

Bank structure

Retail Banking Services

The role of this division is to focus on meeting the financial needs of personal and small business customers with accessible and affordable banking for all customers.

Premium Business Services

This division provides wealth and relationship management for the Bank's premium clients. Commonwealth Securities; one of Australia’s leading online broking services is part of this division.

Wealth Management

Wealth Management brings together the Groups funds management platform, master funds, superannuation, insurance and financial advice business support. Colonial First State, Colonial First State Global Asset Management and CommInsure all form part of Wealth Management.

International Financial Services

The Bank places emphasis on offshore growth opportunities and provides banking, insurance and investment services in these overseas locations.

International operations/activity

The Commonwealth Bank's international presence is in both developed and developing countries. Some of these include:

  • Retail banks in New Zealand (ASB Bank), Indonesia (PT Bank Commonwealth), Fiji (Colonial National Bank) and China (11% of Jinan City Commercial Bank and 19.9% of Hangzhou City Commercial Bank).
  • Commonwealth Bank branches in London, New York, Tokyo, Singapore, Hong Kong and Auckland.
  • Wholly owned life insurance operations in New Zealand (Sovereign Insurance and Fiji (Colonial Fiji Life)
  • Joint venture life insurance businesses in Indonesia (Astra CMG); China (China Life CMG) and Vietnam (Bao Minh CMG)
  • First State funds management business in Hong Kong, Singapore, London, Fiji, China and Indonesia
  • Representative offices in Beijing, Shanghai, Hanoi and Bangalore.

Products and services

The Commonwealth Bank is Australia's largest retail bank and offers customers a range of products and services, including loans, credit cards, transaction and savings accounts. It has a wide presence in Australia with the largest branch and ATM network. It also offers services to people planning to move to Australia.

The Bank's service of business customers, ranging from small business owners to large institutional clients, is diverse and draws upon the products and services offered by all divisions of the Commonwealth Bank group.

Industry awards and recognition

The Commonwealth Bank is consistently the recipient of many highly regarded and well recognised awards. These include:

  • Awards for Excellence – Best Bank in Australia (Euromoney)
  • Best Online Banking Website – NetBank (Australian NetGuide Magazine)
  • Best Commercial Bank in Australia (AsiaMoney)
  • Product Innovator of the Year – CALIA+ Product (Money Magazine)
  • Fund Manager of the Year – Colonial First State (Personal Investor Magazine Awards)
  • Winner, Best Rated Balanced Fund – Balanced Fund (Money Magazine)
  • Best Life Insurance Product (Australian Banking and Finance Magazine)
  • Best General Insurance product for Home and Contents Insurance (Australian Banking and Finance Magazine)
  • Best Project Finance Deal, most innovative deal (Finance Asia)
  • Bank of the Year 2008, (Money Magazine)
  • Website of the Year 2008, (Money Magazine)
  • CANNEX 5-Star Rating
  • Website of the Year 2008, (Australian Banking and Finance)

Environment

Environmental concerns

In 2002, the Commonwealth Bank came under fire by the Wilderness Society for its 16% stake in the controversial woodchipping company Gunns Limited, which is involved in the logging of old growth forests. The Commonwealth Bank has retorted that it does not itself hold any direct investment in Gunns Limited, but instead has invested in Gunns through its funds management businesses, on its behalf.[13] The Wilderness Society claims the Commonwealth Bank is the second biggest shareholder in Gunns, and at a Gunns shareholder general meeting in August 2003, the Commonwealth Bank has used its shareholder voting rights to vote against a resolution which would have stopped the company from destroying old growth forests[14].

Commonwealth also owns an 8.2% share in the Hazelwood power station[15], the most carbon intensive power station[16] in Australia and the industrialised world.

Environmental initiatives

The Commonwealth Bank has demonstrated its commitment to the environment through its support of various initiatives.

  • Conservation Volunteers Australia: Leveraging the power of ordinary Australians who want to make a difference. the Commonwealth Bank Green Ambassadors program awards young people for being actively involved in improving their environment
  • Great Barrier Reef foundation – Coral Futures: This program enables over 375 marine science students to study coral in the reef itself, contributing to the education of future coral reef scientists. The partnership shows the emphasis the bank places on the education of young Australians as well as a sustainable environment.
  • Bank Environmental Policy: All bank staff and premises are guided by a policy which outlines methods to make efficient use of energy, water and paper to reduce the direct impact of the business on the environment
  • World First toner-recycling scheme: This is an industry acknowledged and sponsored toner recycling scheme which aims to reduce the high level of waste. Through this scheme, 100% of toner product is recycled and diverted from landfill.

Community support and sponsorships

Sport sponsorships

  • Cricket: The Commonwealth Bank has expanded its involvement in cricket, sponsoring the one-day international series. The bank is also the principal sponsor of Women’s Cricket at all levels since 1998, including the Australian Women’s Cricket team, the "Commonwealth Bank Southern Stars", and the Australian Women’s Youth team, the "Commonwealth Bank Shooting Stars".
  • Netball: The Commonwealth Bank has been supporting the development of netball in Australia since 1997. The Commonwealth Bank is the major sponsor of the premier domestic netball competition, and provides support at the grass roots level through the Commonwealth Bank Netball Development Fund.

Australian of the Year Award

The Commonwealth Bank is the major sponsor of the Australian of the Year Awards and has supported the program since 1979. The Awards recognise the achievements of Australians and the contributions they have made to their community. There are four Award categories - Australian of the Year, Senior Australian of the Year (60 years and over), Young Australian of the Year (16 to 25 years) and Australia’s Local Hero.

The Commonwealth Bank Foundation

This foundation encourages developments in education, in particular the financial literacy skills of young Australians. It aims to create awareness, skill and understanding of the benefits of a more financially literate community. One of the initiatives is the Bank’s Student Banking Program introduced in 1931 to teach young people the basic skills of money management and encouraging them to save.

Community partnerships

The Commonwealth Bank has established partnerships with many community organisations providing education and greater access to services for all Australians. This support is spread across metropolitan, regional and remote Australia, in such fields as:

  • Health research: Breast Cancer Institute of Australia, Children’s Cancer Institute of Australia, Prostate Cancer Foundation of Australia
  • The Arts: Opera Australia, Australian Chamber Orchestra, Tasmanian Symphony Orchestra, Country Arts South Australia
  • Social Welfare: Legacy Badge Day Appeal, St Vincent de Paul Night Patrol, Wesley Mission Disability Services, Council on the Aging
  • Disaster Relief: Australian Red Cross
  • Remote and Indigenous Education: One Laptop Per Child Australia, to improve the lives of children living in rural and remote Australia by providing them with a purpose-built educational tool that is rugged, low-cost, low-power and connected - the XO laptop

By combining a commitment these varied fields, the partnerships have achieved positive, sustainable outcomes for the Australian community.

Staff Community Fund

The Commonwealth Bank Staff Community Fund was established in 1917 when a group of Bank employees got together to fund the provision of children's cots during World War One. This continues today through the Staff Community Fund. The fund now has over 3,000 members (current and retired) who contribute fortnightly. Money is also raised through special fundraising days such as National Smile Day and one-off donations. The fund has donated over $5 million to various charities over the past ten years. The Bank meets the Fund’s administration costs, so that every dollar raised goes directly to the cause.

As well as raising money Bank staff volunteer their time for the charities they support. These include:

  • National Smile Day: Make every day a smile day! Donations accepted in-branch enable the Clown Doctors to continue the wonderful work of bringing fun and humour to children’s wards across Australia.
  • Midnight Basketball: Keeping Kids off the Streets engages underprivileged children in the Redfern area each Saturday night between 7:30pm and 12am, playing basketball and participating in specific workshops such as drug, alcohol and anger management as well as financial skills and finding employment.

Subsidiaries

Australia

New Zealand

Asia Pacific

See also

References

  1. ^ [1]
  2. ^ [2]
  3. ^ [3]
  4. ^ [4]
  5. ^ Sydney Morning Herald - Cautious Commonwealth Declares 4.7 Billion Record Profit [5]
  6. ^ Commonwealth Bank - Strategic vision and business goals [6]
  7. ^ Commonwealth Bank - History - A brief history of the Commonwealth Bank [7]
  8. ^ Commonwealth Bank of Australia (2008). "Commonwealth Bank of Australia to acquire Bank West and St Andrew's". http://www.commbank.com.au/about-us/news/media-releases/2008/081008-news-bankwest-acquisition.aspx. Retrieved 2008-10-09.  
  9. ^ Bank of Western Australia Limited (2008). "BankWest and St Andrew's sold to Commonwealth Bank". http://www.bankwest.com.au/Media_Centre/Media_Releases/Media_Releases_2008/BankWest_and_St_Andrews_sold_to_Commonwealth_Bank/index.aspx. Retrieved 2008-10-09.  
  10. ^ http://www.news.com.au/business/story/0,27753,24840570-462,00.html Aussie Home Loans and Commonwealth Bank to buy Wizard Home Loans
  11. ^ http://www.thewest.com.au/aapstory.aspx?StoryName=510530 CBA to buy 33% Aussie Home Loans stake
  12. ^ Osborne, Paul (10 August 2009). "Storm Financial collapse plan outlined". The Age (Melbourne). http://news.theage.com.au/breaking-news-business/storm-financial-collapse-plan-outlined-20090810-ef9y.html. Retrieved 15 January 2010.  
  13. ^ Commonwealth Bank position on Gunns Limited, 9 October 2002. Accessed: 30 October 2006. [8]
  14. ^ The Wilderness Society: National Day of Action against the Commonwealth Bank. 29 Oct 2003. Accessed: 30 October 2006. [9]
  15. ^ Environment Australia: Corporate profile of Hazelwood power station. Accessed: 30 October 2006. [10]
  16. ^ WWF: Hazelwood tops international list of dirty power stations, 13 Jul 2005. [11]

External links


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